Half-speed recovery

Standard & Poor’s published an update to the company’s investment policy this morning in a note that was circulated to retail investors via brokerage houses. Of immediate interest, the company seems to be sticking with the story from late last year, which is that the so-called “recovery” doesn’t really square with the massive rally in equities seen since March.

In summarizing its longer-term outlook, S&P characterized the recovery as “half-speed,” citing the first four quarters’ 2.7% growth. This rate of growth is significantly less than that traditionally seen in the immediate aftermath of a recession. Given the amount of stimulus – both direct and indirect – thrown at the economy, I agree completely that 2.7% is nothing to write home about.

The company prefaced its policy update by noting that “sentiment [has] turned sharply bullish [in the] last six weeks, a key warning sign in our view.”